Emerging markets may be headed for a period of increased volatility as the midyear lull saps liquidity and the US-China dispute leaves traders struggling to decipher the yuan’s likely direction.

U.S. data on initial jobless claims, scheduled for release Thursday, are forecast to increase.

Emerging markets may be headed for a period of increased volatility as the midyear lull saps liquidity and the U.S.-China dispute leaves traders struggling to decipher the yuan’s likely direction. Chinese, Taiwanese and Philippine trade data for July this week will give an indication of whether the trade tension is starting to weigh on regional exports. The standoff has already prompted BlackRock Inc., the world’s largest asset manager, to trim its holdings of developing-nation assets, saying that it may be one of many dynamics weighing on global growth.

U.S. data on initial jobless claims, scheduled for release Thursday, are forecast to increase.

“With uncertainty on U.S.-China trade issues in the backdrop, EM will certainly react to any developments, either escalation or détente, from the U.S. side,” said Maximillian Lin, a Singapore-based emerging markets Asia strategist at NatWest Markets.

A gauge of expected price swings in emerging markets climbed to the highest level since February 2017 on Monday, while the offshore yuan’s one-week implied volatility jumped to a six-month high last week. And the negative correlation between dollar-yuan and developing-nation currencies has deepened since April as the two counties exchange blows.

The onshore yuan is the worst-performing emerging-market currency after Turkey’s lira in the past month, which spurred action from Chinese policy makers. The People’s Bank of China will impose a reserve requirement of 20 percent on some trading of foreign-exchange forward contracts, it said in a statement Friday evening.

Investors will watch how the various market-drivers — from central-bank action and the volatility in technology stocks — will affect developing-nation assets “when markets are thin,” said Richard Segal, a senior analyst at Manulife Asset Management Ltd. in London. “The emphasis should be on keeping durations short and focusing on higher-quality credit over the next month.”